New Competition Regime - Competition Law - Lecture Slides, Slides of Competition Law and Policy

Download New Competition Regime - Competition Law - Lecture Slides and more Slides Competition Law and Policy in PDF only on Docsity! Mergers Under New Competition Regime Docsity.com Competition Act, 2002 • The trident enforcement/regulatory dimensions of the Act are: 1. Anti-competitive agreements; 2. Abuse of dominance; and 3. Regulation of Combinations. • The first two areas are prohibited ex post while the regulation of merger is generally ex-ante. • The other two dimensions are : Rendering of opinion; and Undertaking competition advocacy 2 Docsity.com Remedies with CCI:  Approve/ block the combination  Approve modification, - Divestment of some assets or business - Requiring access to essential inputs/facilities - Dismantling exclusive distribution agreements - Removing non-compete clauses - Imposing price caps or other restraints on prices - Refrain from conduct inhibiting entry of others 5 Docsity.com Other laws/bodies regulating mergers  Companies Act, 1956  Sick Industrial Companies (Special Provisions) Act, 1985  SEBI (Substantial Acquisition of Shares and Takeovers) Regulation, 1997  Regulatory Authorities also regulate mergers 6 Docsity.com Horizontal & Vertical Combinations 7 Raw Material Supplier Raw Material Supplier Raw Material Supplier Manufacturer Manufacturer Manufacturer Retailer Wholesaler Wholesaler Wholesaler Retailer Retailer Docsity.com Case Law-from competition l perspectives & facts Volvo/Scania (2000) IBM/SBCS (2004)  In the first 6 months of 2009: Indian Companies were involved in 136 transactions: 34 inbound deals – 31 outbound targets. *Venture Capital.  In 2008: China ranked first (1539 deals) and India ranked third (536 deals). China ranked first in terms of transaction value ($59.24 Billion) as well as in terms of number of transactions (1539 deals)  India is ranked third with 536 deals worth $23.01 Billion. * Source – BW – Thomson Reuters M&A Deal Tracker. 10 Docsity.com The Competition Act, 2002  The Act provides for ex ante regulation of certain combinations.  Mandatory Pre-Notification - Failure attracts penalty  Suspensive Jurisdiction  Filing triggered when aggregate exceeds prescribed value of assets or turnover .  Caliberated thresholds when parties have‘operations in India or outside’ or belong to a ‘group.’ 11 Docsity.com Triggering Limits Operations of Combining Parties Combining Parties Group to which Combining Parties (post merger) belong. In India Total value of assets > Rs.1000/-crores or turnover Rs.3000/- crores. Total value of assets of more than Rs.4000/- crores or turnover of more than Rs.12000/- crores In India or Outside Aggregate value of assets > $500 mn (incldg. at least in India Rs.500 crores or turnover > $1500 mn (incldg. at least turnover of Rs.1500 crores in India). Aggregate value of assets of more than $2 bn (incldg. at least assets of Rs.500 crores in India) or turnover of $6 bn (incldg. Rs.1500 crores turnover in India. 12 Docsity.com Inquiry by the CCI  The CCI shall inquire into whether a combination is likely to cause an appreciable adverse effect on competition.  CCI to consider-  extent of imports, barrier to entry, innovation, substitutes;  level of combination, countervailing power,  likelihood of increase in price or profits, removal of effective competitor,  falling business, contribution to economic development, balancing pros and cons. 15 Docsity.com Take away  CCI to issue Guidelines with Helpline Manual  Need for multi phase filing;  Need to omit Section 108A to H of the Companies Act, 1956;  Treatment of subsidy, aid and taxes in determining ‘turnover’,  Turnover in different service sectors to be clarified  PSUs to be treated on stand alone basis and not as same ‘group’  Encouragement to parties to inform changes  Provide for preliminary conference;  Review of threshold limits/indexation/conversion 16 Docsity.com Role of Company Secretary  Pre merger,  Filings of notice,  Coordination with other Authorities-High Court- SEBI,  Coordination with other Regulators,  Coordination in multi jurisdictional filings,  During the review of the notice by the CCI,  Post merger 17 Docsity.com